Millennials have caught a bad rap from many people. Because there have been so many millennials that have lived with parents or stayed as a renter, people stereotype them as being lazy or not caring. However, this is not the reason that most millennials haven’t entered the housing market.
In fact, many millennials would like to invest in a house, or they are choosing not to buy for specific reasons. So before you go judging a millennial, consider some of these reasons why it’s not as easy to buy as one would think:
The cost of school has been steadily on the rise. Many students are obtaining student loans to help carry the burden of getting their degree. In 2016, the average college student was graduating with over $37,000 in school loans.
While student loans are not the worst type of debt to have, they do factor into your debt-to-income ratio. If your ratio is too high, you are going to be denied for a loan. College graduates that have student loans should work to manage their payments and then pay down on their loans as quickly as possible.
Most college students and young people aren’t worried about checking their credit. However, it’s wise to take advantage of the free credit checks that you can get from the three big credit bureau companies each year. If you spread them out over the year, you should always have a good understanding of what is happening with your credit.
If you are the victim of identity theft, it will take some time to rectify the situation and repair your credit. And this isn’t always caused by a stranger. There are instances of parents taking out loans in the name of their children. If the parent defaults on the loan, it damages their child credit.
Saving up for a down payment is no easy task. Lenders had gotten lax on the requirement of a 20% down payment for years, until the housing market crisis. Now lenders are looking for that down payment and millennials are having a hard time saving up.
The rental market has skyrocketed, which has brought the cost of rent up, making it harder to have money left to save up at the end of the month.
Even if a millennial is able to come up with a 20% down payment, they are fighting against stiff competition for homes. In many metro areas, the properties are being bought up by investors that are paying 100% cash. The majority of sellers are going to opt for an easy cash deal over working with a buyer that is obtaining a mortgage.
Millennials have their work cut out for them when trying to enter the housing market. The numbers are still predicting that by next year millennials will be taking over the housing market as the largest number of buyers. If you fall within this generation, don’t despair! The tides will be turning, so save up and get ready.